We do not generally look to Compass, the political groupuscule, for fine economics ideas - that's not their function. They're more a kaffeeklatsch for the wibbling middle classes in general. However, we do think we ought to mention that their latest idea is simply nonsense, entire arglebargle.

The set up is that as the machines do more then fewer people will be working and gaining incomes from having done so. As the income tax is a major pillar of the tax system this means we must tax the machines to make up for the losses of that income tax.

An alternative source of tax revenue is needed. Where personal tax has been collected for over two hundred years on the backs of men and women working, now a change is necessary. Where the fruits of labour have resulted in personal tax revenues, I suggest that we now consider taxing the labour of machines, because it is machines that are increasingly producing income now. Working out how to tax machines would not be easy and implementing such a policy would be harder. The details do not need to be discussed here. They will be worked out later. Taxation could be levied on a simple unitary system and on an annual basis. Where an automatic welding machine is being used in car manufacturing it would be relatively easy to determine how many manual welders have been displaced and a level of taxation calculated. It would be much more difficult to tax a combine harvester. How to tax an automated telephone system? How to tax a launderette? I have an abiding vision of rows and rows of copy typists in an office in the 1950s but they have all been replaced now. But difficulties should not deter a consideration of the idea.

What is being missed is the most basic part of GDP accounting. The value of all that is produced equals the value of all that is consumed. And the value of either or both individually is the incomes of everyone.

From the first we want to have that increased production as that means that consumption can rise. Hurrah, we're richer! We thus welcome the machines as they increase production and thus make us richer, Hurrah! again.

What Compass is missing is that that increased production and or consumption is also, by accounting identity, the same as the increased incomes of all of the people. Those incomes might come as rent, as interest, as profits, as what we think of as normal income income. Thus, by definition, if production is increasing, consumption is, then so also are incomes increasing.

It therefore cannot be that there will be a tax shortfall as a result of production increasing and incomes falling. Because it is not possible for production to increase and incomes to fall. Because all aggregate production is equal to all aggregate income.

Another way to put this is that they're quite right, the machines don't get paid for producing. But someone, somewhere, does get the income from the machines' production. It might well be true that we'll not be getting the income tax from the worker (even though their contention that the displaced worker will not be working at something is wrong) but that income will be income to someone and we really do tax all incomes already.

By not understanding this, something which is explained in every A level text book, Compass have managed to recommend taxing the very thing which makes us all richer, automation. Maybe your only wibbling over the coffee cups, rather than proposing economic policy, would be safer for all of us....